How Credit Card Debt Consolidation Can Help

Credit card debt consolidation seems to be the most talked-about term in the world of credit cards. It's true that credit cards have been very useful and convenient for us and we, in fact, treat credit cards as a necessity.

In case you are unsure, what I mean by credit card debt consolidation is combining your current card balances into one account, which is usually a brand new card, although you could consolidate onto a card you already have.

The main benefit of credit card debt consolidation is realised in terms of APR reduction (and hence reduction in credit card debt growth rate). This is touted as the most important benefit (and sometimes the sole benefit) from credit card debt consolidation. However, credit card debt consolidation comes with few more benefits as well. Some of these credit card debt consolidation benefits are widely publicised by the credit card suppliers and some not so much:

Initial APR: As mentioned above, lower APR is the biggest benefit from credit card debt consolidation. Since consolidation is used by credit card suppliers as a tool to attract consumers, they generally offer a 0% APR for a initial period of 6-9 months of you signing up with their credit card.

Standard APR: If you have a lot of debt, then you will probably still have a balance after the initial low rate. Be careful not to take a deal that has a 0% initial rate but then a standard rate that is too high.

0% on purchases: This is another common benefit from credit card debt consolidation. The 0% interest (or some lower percentage) on purchases is offered as an incentive for credit card debt consolidation. This credit card debt consolidation benefit is again applicable only for a short initial period.

Easy management: What I like most about consolidating credit card debt is that it makes it easier to see your balance decreasing. (You are paying your debt off, right?) With one card and one balance, you can track your progress more easily.

Other Benefits: These are not as important, but you might get rebates, discounts or reward points depending on the type of card you get. Don't let this be crucial, but just an additional plus if you get it. You might even ask for something like this. Sometimes the phone rep holds things back and adds them if that will close the deal.

So what do you do when you get your debts consolidated and your new card arrives in the mail? Hopefully you have cut up your other cards that now have zero balances. Consider doing that with this one too. Or at least put it where it takes an effort to get it. And that means not in your wallet. Use the consolidation as a tool to get out of debt and you will have made a good choice. Don't use it to dig yourself deeper into credit card debt.

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Author Paul McDermott shares his experience with credit card debt consolidation and other credit and debt issues at Credit Card Debt. Learn about his mistakes so you can avoid them.